The Indian rupee continued its downward trajectory on Thursday, declining by 9 paise to 85.96 against the US dollar in early trade, pressured by sustained dollar demand from foreign investors, oil firms, and importers.
At the interbank foreign exchange market, the domestic currency opened at 85.86 before weakening further to 85.96, marking a 9 paise drop from its previous close.
On Wednesday, the rupee had already fallen by 26 paise to settle at 85.87, making it the second consecutive session of depreciation.
Forex traders attributed the fall to renewed demand for the greenback, ahead of the Reserve Bank of India’s monetary policy announcement. The central bank’s Monetary Policy Committee (MPC) commenced its three-day deliberations on Wednesday, with its decision scheduled for release on Friday, 6 June.
Also read: Rupee declines 21 paise against US dollar
"The Indian rupee weakened past the 86 mark against the US dollar, driven by a storm of global risk aversion and importer demand for dollars. Moreover, the sentiment remained fragile ahead of the central bank’s policy review," said Amit Pabari, Managing Director at CR Forex Advisors.
Further dampening sentiment was renewed geopolitical tension in Eastern Europe. “The Russia-Ukraine tensions flared up once again, pushing Brent crude higher to USD 65.70 per barrel. For India, which is a net oil importer, this spells trouble,” Pabari added.
The dollar index, which measures the strength of the US dollar against six major currencies, was trading marginally higher at 98.85, up 0.07 per cent.
In futures trading, Brent crude slipped 0.14 per cent to USD 64.77 per barrel. However, any upward pressure on crude prices remains a concern for the Indian economy, which relies heavily on oil imports.
Meanwhile, domestic equities exhibited strength. The 30-share BSE Sensex surged 417.96 points, or 0.52 per cent, to 81,416.21, while the broader NSE Nifty gained 125.05 points, or 0.51 per cent, to reach 24,745.25.
Foreign Institutional Investors (FIIs) remained net buyers on Wednesday, purchasing equities worth ₹1,076.18 crore, according to provisional exchange data.
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